Your wine to cost less

If you love wine made in India, most of which is in fact made in Maharashtra, there’s good news for you. Your 750-ml bottle of Chenin Blanc, Shiraz or any other premium brand could now cost up to Rs 100 less.

The state government has slashed value added tax (VAT) on local wines from 25 per cent to 4 per cent, paving the way for a drop in prices. VAT on imported wines has been reduced by 5 per cent.

The decision was taken at a special Cabinet meeting convened in Nashik — the heart of the business of wineries — on Wednesday.

Maharashtra produces 90 per cent of the country’s wine and has 58 out of a total of 62 wineries. Most of these wineries are in north Maharashtra, where grape growers and wine manufacturers constitute a significant lobby.

The government has also ensured that excise duty for wineries in the state stays lower than in other parts of the country by extending the 2001 state wine policy to 2020. The policy was to expire in 2011.

The Assembly elections are scheduled for September-October this year.

The government had steadily increased VAT on wines from 4 per cent to 25 per cent, leading to a dip in sales. Premium wines manufactured in the wine belt of Nashik and Pune were being sold for anything between Rs 440-600 per bottle. This also resulted in wineries picking less produce from grape growers and therefore, sluggish growth of the market.

“The tax reduction would be of great help for the industry as it will see prices of premium wines come down by Rs 50-Rs 100. But we will also have to look at whether all wine producers pass this benefit down to the consumer,” Nitin Mohite, director, sales and marketing, of Nashik-based Vinsura Wines said.

“We will convene a meeting of grape farmers and wine manufacturers so that this benefit is passed on to them. By the time of the next grape season, that is, February 2010, the industry should see a revival,’’ Sameer Bhujbal, Nashik MP, said.

Along with benefits for wine manufacturers, the government also announced a grand package of Rs 6,509 crore for north Maharashtra, which includes sops for various sectors like tourism and infrastructure.